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Should Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) Be on Your Investing Radar?

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Launched on 06/28/2017, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Goldman Sachs Funds. It has amassed assets over $308.63 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.82%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Healthcare sector--about 17.70% of the portfolio. Information Technology and Industrials round out the top three.

Looking at individual holdings, Usd U.s. Dollar (USD - Free Report) accounts for about 3.80% of total assets, followed by Redfin Corp (RDFN - Free Report) and Irhythm Technologies Inc (IRTC - Free Report) .

The top 10 holdings account for about 6.85% of total assets under management.

Performance and Risk

GSSC seeks to match the performance of the Goldman Sachs ActiveBeta U.S. Small Cap Equity Index before fees and expenses. The Goldman Sachs ActiveBeta U.S. Small Cap Equity Index is designed to deliver exposure to equity securities of small capitalization U.S. issuers.

The ETF return is roughly 15.05% so far this year and was up about 30.84% in the last one year (as of 02/24/2021). In the past 52-week period, it has traded between $28.45 and $63.63.

The ETF has a beta of 0.99 and standard deviation of 27.16% for the trailing three-year period. With about 1475 holdings, it effectively diversifies company-specific risk.

Alternatives

Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, GSSC is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P SmallCap ETF (IJR - Free Report) and the iShares Russell 2000 ETF (IWM - Free Report) track a similar index. While iShares Core S&P SmallCap ETF has $65.82 billion in assets, iShares Russell 2000 ETF has $66.32 billion. IJR has an expense ratio of 0.06% and IWM charges 0.19%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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